Commission of the European Communities v Italian Republic.

• Jurisdiction: European Union
• Celex Number: 62005CC0134
• ECLI: ECLI:EU:C:2006:781
• Court: Court of Justice (European Union)
• Date: 14 December 2006
• Procedure Type: Recurso por incumplimiento
• Docket Number: C-134/05

OPINION OF ADVOCATE GENERAL

POIARES MADURO

delivered on 14 December 2006 ¹(1)

Case C‑134/05

Commission of the European Communities

v

Italian Republic

(Failure by a Member State to fulfil obligations – Articles 43 EC and 49 EC – Free movement of services – Right of establishment – Extrajudicial debt recovery)

1. This action, brought under Article 226 EC, seeks a declaration that, by virtue of the conditions to which it subjects the activity of extrajudicial debt recovery, including where that activity is carried on by undertakings established in other Member States, the Italian Republic has failed to fulfil its obligations under Articles 43 EC and 49 EC.

I – Legal framework and pre-litigation procedure

2. The Italian Law on public security, adopted by means of Royal Decree No 773 of 18 June 1931 (Ordinary Supplement to GURI No 146 of 26 June 1931), as interpreted and supplemented by a circular of the Ministry of the Interior of 2 July 1976 (‘the Italian rules’), provides essentially that:

– pursuit of the activity of extrajudicial debt recovery is subject to the issue of a licence by the Questore, the local police authority;

– the licence is valid exclusively for the premises which are specified in it;

– the authorised activity is restricted to the province in which the licence was issued;

– the Questore may make the grant of the licence subject to requirements additional to those laid down by the aforementioned law in order to maintain public confidence;

– a licence holder must at all times visibly display in his premises the table of services which he provides and the scale of charges applicable to them, and cannot supply services other than those listed in that table;

– objective and uniform parameters must be laid down so as to ensure that the prices charged in a single province are not too diverse;

– extrajudicial debt recovery agencies cannot provide the financial services governed by Legislative Decree No 385/93 of 1 September 1993 relating to banking and credit services (Ordinary Supplement to GURI No 92 of 30 September 1993), which are reserved exclusively for financial intermediaries entered in the appropriate register of the Ministry of the Treasury.

3. Taking the view that most of those provisions were incompatible with Articles 43 EC and 49 EC, the Commission of the European Communities sent a letter of formal notice to the Italian Republic on 21 March 2002. Although they disputed the existence of an infringement of the rules of the EC Treaty, the Italian authorities replied that they had set up a working group to consider the possibility of revising the rules at issue and sent the Commission a letter announcing the preparation of draft legislation to that effect. However, since neither the draft legislation nor the timetable for its adoption was communicated to it, the Commission issued a reasoned opinion on 7 July 2004. The letter having yielded no results, the Commission brought this action before the Court on 22 March 2005.

II – Assessment

4. Extrajudicial debt recovery may be defined as ‘any act or practice which is intended to encourage a debtor to settle an unpaid debt, with the exception of any recovery on the basis of an enforcement order’. (2) The pursuit of that activity is regulated by various provisions of the Italian rules. According to the Commission, those rules are incompatible with Articles 43 EC and 49 EC in several respects. More specifically, the Commission raises eight complaints against them; however, some of the complaints appear to be so closely connected that, for the sake of clarity of analysis, the Commission’s arguments may be combined under five headings.

5. By its application, the Commission once again asks the Court to clarify the margin of discretion available to the Member States in regulating the pursuit of an economic activity which has not yet been the subject of Community legislation.

6. In that regard, it should be pointed out at the outset that, according to the case-law of the Court, ‘in the absence of harmonisation of a profession, Member States remain, in principle, competent to define the exercise of that profession but must, when exercising their powers in this area, respect the basic freedoms guaranteed by the Treaty’. (3) It is true that the freedoms of movement, such as the rights to freedom of establishment and freedom to provide services, are not intended to liberalise national economies by precluding any legislation by the State which might affect economic and commercial freedom; if they were, they would sound the death knell for the powers of the Member States to legislate in economic matters. They do serve, however, to promote the decompartmentalisation of national markets by making it easier for operators to carry on their activity at a transnational level. To that end, they are intended to cover all transnational situations and to prohibit not only any direct or indirect discrimination on grounds of nationality introduced by the Member States, but also any national measure resulting in the treatment of transnational situations less favourably than purely national ones. (4) In other words, in accordance with the logic of the internal market, they serve to ensure that discrimination which obstructs the exercise of the freedom of movement will be challenged by legal action. The influence which the freedoms of movement thus have in turn compels the States to take into account the impact which measures to regulate their national economies have on the position of Community nationals wishing to exercise their right to freedom of movement.

7. More specifically, the less favourable treatment of transnational situations which the principle of freedom of movement prohibits may take different forms. It may, of course, be the effect of discrimination advantageous to its own nationals. It may also arise from a restriction on market access, be it that the national rules have the effect of protecting the positions acquired by economic operators established in the national market (5) or that they make the pursuit of a transnational activity (6) or trade between Member States more difficult.

8. It is in the light of this analytical framework that the relevance of the complaints raised by the Commission should be assessed.

9. As the following analysis will make apparent, those complaints are well founded. This does not mean that a Member State cannot regulate the activity of extrajudicial debt recovery. Indeed, it is no doubt desirable that it should be regulated. However, the conditions which the Italian Republic has attached to the pursuit of that activity are far too restrictive of the freedom of establishment and the freedom to provide services.

A – The requirement of a licence and the additional conditions governing the award of licences

10. The Commission first calls into question the condition, which the Italian rules attach to pursuit of the activity of extrajudicial debt recovery, that prior administrative authorisation must be obtained from the local police authority, the Questore. In so far as that requirement is also imposed on providers of services established in another Member State, without regard to whether they have complied with any obligations laid down by the rules of the country in which they are established for the purpose of protecting the public interest with which the Italian rules are concerned, those rules infringe the freedom to provide services. This is particularly true given that the Italian rules give the Questore the power to impose requirements additional to those which they expressly lay down in order to ensure public confidence.

11. That complaint and the supporting arguments raised by the Commission are, in my view, entirely well founded.

12. In their defence, the Italian authorities contend, first of all, that the prior authorisation scheme constitutes neither direct nor indirect discrimination against cross-border service providers, since the licence requirement also applies to Italian operators and/or operators established in Italy. However, it is common knowledge that, in keeping with the approach originally adopted with regard to the free movement of goods, the principle of the freedom to provide services has gradually come to be interpreted as prohibiting not only directly or indirectly discriminatory restrictions, but also obstacles applicable without distinction. According to a form of words used since Säger, (7) ‘Article 59 of the Treaty [now, after amendment, Article 49 EC] requires not only the elimination of all discrimination against a person providing services on the ground of his nationality but also the abolition of any restriction, even if it applies without distinction to national providers of services and to those of other Member States, when it is liable to prohibit or otherwise impede the activities of a provider of services established in another Member State where he lawfully provides similar services’. It is settled case-law that prior administrative authorisation is liable to impede or render less attractive the provision of services and therefore constitutes a restriction on the freedom of movement of the provider of those services. (8) It constitutes a restriction on access by a cross-border service provider to the market of the host State.

13. Secondly, the Italian authorities rely on reasons relating to public policy and public security, such as the need to combat criminal infiltration, combating usury and the protection of debtors, to justify the introduction of the ex ante control which the licence requirement represents. Its purpose is, in particular, to ensure that the activity of extrajudicial debt recovery is not carried on by individuals who may commit serious offences against the person and property of debtors.

14. Such interests unquestionably constitute overriding reasons in the general interest capable in principle of...